Latest News 
Legal costs recoverable as service charge despite no express reference in lease
27 01 2012
The Lands Chamber of the Upper Tribunal (LCUT) has held that a management company could recover its legal costs through the service charge, even though the words "legal costs" or "the costs of legal advisers" did not appear in the lease. The lease in this case permitted the recovery of professional advisers' fees relating to the enforcement of covenants. The LCUT held that this was sufficiently clear and unambiguous to mean that the tenants were liable, via the service charge, to subsidise the landlord's costs of suing defaulter tenants. This case will be of interest to landlords and management companies, as it illustrates that the absence of an express reference may not be fatal to the recovery of legal costs.
The decision also highlights that, when asked by a tenant to make an order under section 20 of the Landlord and Tenant Act 1985, the Leasehold Valuation Tribunal should consider the risk of a tenant-owned management company becoming insolvent, if it is unable to recover its legal costs of enforcing service charge provisions. (Plantation Wharf Management Company Ltd v Jackson and another [2011] UKUT 488 (LC).)